A Requirement of a Good Operating Target Is That the Fed

question 13

Multiple Choice

A requirement of a good operating target is that the Fed can exert substantial control over its level and changes. If the rate were to rise above the level that the Fed thought conducive to economic growth and high employment, the Fed would ________.

• A) engage in open market purchases and not inject reserves into the banking system.
• B) engage in open market purchases and inject reserves into the banking system.
• C) not engage in open market purchases but would inject reserves into the banking system.
• D) neither engage in open market purchases nor inject reserves into the banking system.

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Definitions:

Brightly Lit

Having abundant light or illumination, often enhancing visibility or creating a specific atmosphere.

Dark Room

A dimly lit or unlit room, often used for processing photographic materials, where light-sensitive materials are not exposed to light.

Rods and Cones

Photoreceptor cells in the retina of the eye responsible for vision. Rods are sensitive to low light levels, while cones support color vision and detail in well-lit conditions.

Retina

A layer of cells at the back of the eye that senses light and sends visual signals to the brain for processing.